Users currently pay for goods priced in micro payment levels, such as five cents or ten cents using cash. Such payments are not made with credit cards because the cost of the credit card transaction processing is too high, making it impractical both for vendors and credit card companies to accept the use of a credit card for micro payment purchases.
The cell phone imbedded with a RFID (Radio Frequency Identification) tag or NFC chip (Near Field Communication Chip) allows loading of the tag or chip with cash using a special machine which then allows the payment of goods in micro payment levels or non-micro payment levels. A non-contact RFID tag or NFC reader is required to subtract the amount of the transaction from the cash available in RFID tag or NFC chip and record the transaction data. Cell phones are presently being offered with imbedded NFC chips. This fact indicates companies are capturing micro payment transaction market currently being made in cash and ignored by credit card companies.
These payment methods require the user to load the cell phone with money using a special machine available only at banks or limited places. Also, a non-contact card reader is required at the vendor site to read and subtract the purchasing amount from the amount of money within the user's cell phone. Very few vendors have a non-contact card reader. Therefore these payment methods are inconvenient for users. Furthermore, if the user loses the cell phone, it is the same as losing cash.
Japan Railway issues SUICA cards and subway systems issue PASMO cards both of which have built-in IC chips. SUICA and PASMO cards allows passengers to enter and exit train stations very quickly simply by flashing remotely their SUICA or PASMO card at the non-contact card readers installed at the gate. There are some vendors inside and near JR and subway stations that have non-contact card readers, allowing users to purchase low cost items such as a bottle of water, gum or a magazine, etc. It is said that there are about 20,000 non-contact card readers in Japan. Most of these card readers are used by Japan Railway and subway systems for reading train tickets. There are over 800,000 regular card readers for conventional credit cards in vendor sites across the entire Japan. However, all vendors worldwide have barcode scanners with cash registers. While it appears that the application for RFID or NFC technologies are very convenient, they are best suited for transportation but not suited for purchasing transactions.
SUICA card issued by Japan Railway (JR) loaded with pre-paid amount of money are used by over 10 millions of users for train tickets and purchases of low cost goods at participating vendors near JR stations in Japan. SUICA card requires a special non-contact card reader therefore the use of SUICA card is limited to vendors having a non-contact card reader. Similarly, PASMO card issued by subway systems companies for purchasing subway train tickets and purchasing low cost goods at participating vendors near subway stations in Japan also are being used by millions of users. PASMO card also uses a non-contact card reader. Edy card issued by SONY Corporation for purchasing goods requires the payment of subscription fee and service charges are relatively high. Edy card also requires loading of cash and requires a non-contact card reader.
JCB, the largest credit card company in Japan issued QUICPay card for micro payments. QUICPAY is a post pay card like a conventional credit card. QUICPay card also requires non-contact card reader. SUICA card, PASMO card, Edy card and QUIC Pay card do allow payment of purchases priced at micro payment level. SUICA card, PASMO card and Edy card has the disadvantage in that if the card is lost, the remaining money in the card is lost. SUICA card, PASMO card, Edy card and QUICPay card can be used only at vendors having the special non-contact card reader and they are used only within Japan since the special non-contact card reader are rarely available outside of Japan.